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Policy Statement by Foreign Minister Guido Westerwelle in the German Bundestag: “Europe’s path out of the crisis: growth through competitiveness”

11.05.2012

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Ladies and gentlemen,

Europe is currently going through a difficult phase. Together with our European partners, the German Government is working hard to master these difficulties. We’re aware of Germany’s responsibility for Europe. And we’re aware of Europe’s responsibility in the world.

Europe finds itself in a defining phase. Europe’s image in the world is currently being defined on a long-term basis. The image which citizens have of Europe is currently being defined on a long-term basis. And Germany’s image in Europe is currently being defined for many years to come.

We’re faced with a sovereign debt crisis. The debt levels in certain eurozone countries are so high that the financial markets are asking whether these countries will ever be able to repay these massive debts. The sovereign debt crisis has thus turned into a crisis of confidence.

To regain confidence, we need to provide convincing proof that the eurozone will be an area of enduring financial stability in the future.

We’ve mapped out a course which will enable us to do just that: the Stability and Growth Pact is to gain new authority. In future, violations against the Stability Pact will be penalized effectively at an early stage. Back in 2004 the then Federal Government watered down the Stability Pact. This Government won’t repeat that mistake. We expect the Government at that time, that’s to say today’s opposition, to now work with us constructively to rectify the consequences of that mistake.

Under the fiscal compact, governments throughout Europe have undertaken to introduce a national budget rule. The compact was signed by 25 Heads of State and Government. Three member states have already ratified it, namely Portugal, Slovenia and Greece. Ireland is holding a referendum on the compact on 31 May. And in other member states, the parliamentary process has been initiated.

The fiscal compact has been adopted. It will be applied. The countries of Europe have thus agreed to end our policy of running up debts. We’ll stand by our decision.

Germany tirelessly championed this course and we took a tough stand during the negotiations. In Europe and in the international arena, Germany has been calling for an end to the policy of racking up debts. It undermines our country’s credibility when some German Länder continue to run up debts. Excessive sovereign debts were the root cause of the crisis. This led to speculation. We need new rules to counter both. One of the lessons to be learned from the crisis is that we have to regulate the financial markets better. The Federal Government banned naked short selling for good back in May 2010. And we’re making the banking sector more stable. We’ve introduced stricter regulations on equity capital, while the bank tax has re established the link between risk and liability.

One pillar of our policy is the fiscal compact for lower debts. The second pillar is growth through greater competitiveness.

This Government needs no persuading to adopt a growth-oriented policy. For there can be no confidence without debt reduction. No investment without confidence. No growth without investment. No new jobs without growth. No new revenue without new jobs. For budgetary discipline and growth are two sides of the same coin.

Since the start of the sovereign debt crisis, the Federal Government has been striving for more growth through greater competitiveness in Europe alongside the necessary budget consolidation. Two years ago, the new strategy for growth and employment, Europe 2020, was adopted. Since then, all European Councils, not to mention many General Affairs Councils and other Council configurations, have addressed growth, competitiveness and employment, incidentally often in response to a Franco-German initiative.

The most recent European Council in March also stressed the necessity of budget consolidation as well as the promotion of growth, competitiveness and employment. Growth will be on the agenda again at both the informal extraordinary Council meeting on 23 May and the European Council in June.

Growth cannot be bought on credit. The key to increased growth is competitiveness. And competitiveness can only be achieved through structural reforms.

About ten years ago, Germany was regarded as the sick man of Europe. Today, Germany is again the engine of growth in Europe. Today, Germany is again globally competitive, our unemployment rate is falling. In particular, our youth unemployment rate is lower than anywhere else in Europe. That’s the reward for the efforts made by our citizens, as well as employers and employees. It’s also the result of the new political framework established by the CDU-FDP coalition. And Agenda 2010 also helped pave the way to the good position we’re in today.

We’re aware of the difficulties which many people in Europe are currently facing and we have great respect and admiration for their efforts.

Given the considerably shrinking economies in some countries, high unemployment levels, and above all alarmingly high youth unemployment rates, the reforms which have now been launched are the only chance for long-term improvement. This is the only way to turn around the economic and social situation in certain member states and in Europe as a whole.

With regard to Greece, just let me say that we stand by our pledges of assistance. However, that also means that the agreed reforms in Greece have to be implemented.

We want to hold the eurozone together. Greece’s future in the eurozone now lies in its own hands.

We want to, and indeed will, help Greece. However, Greece must allow itself to be helped. Should the binding reform course be abandoned, the payment of further aid tranches will no longer be possible.

Solidarity is not a one way street. Solidarity cannot function without sound budgeting.

What’s been agreed must be honoured. That’s the position of this Government. That’s the position of our European partners. That’s the position of the President of the European Commission. And that’s the position of the President of the European Parliament.

Responsibility for new growth lies first and foremost with member states. They must restore competitiveness, which is vital for new growth, through national structural reforms.

That includes making social security systems fit for the future. It also includes enhancing the access of young people in particular to labour markets and eradicating moonlighting. To this end, we need a firm commitment to the promotion of education, science and research.

At European level, too, we want to do more to boost growth. A European growth pact must encompass the following points:

1. The European Union must utilize its resources better than before without spending more. There are certainly considerable resources at hand. The EU’s budget for 2014 to 2020 envisages a volume of more than one trillion euros. This budget must highlight the European Union’s political objective of shaping the future and not administering the past.

We need new ways of thinking on how to spend these resources. The aim should no longer be to simply obtain as much money as possible for a country’s own special interests. That ultimately leads to problematic developments such as the wellness oases in romantic hotels funded by the EU. And we all know of absurd examples just like this from our own country.

Structural funds allocated by the EU must help boost growth and competition in Europe. We owe that not only to those who are relying on our solidarity but also to every taxpayer in Europe.

This Government has therefore put forward an action plan for better spending in the budget negotiations in Brussels. We also want spending to be more closely monitored and linked to quantifiable criteria. We want to use European taxpayers’ money to achieve good results and not to fulfil funding quotas.

2. Just under 80 billion euros from the Structural and Cohesion Funds of the current financial period are still available and haven’t to this day been allocated to any concrete projects.

We want the European Commission to take these funds and, together with the member states, to invest more quickly and effectively now in new growth through better competitiveness.

3. As the banking sector is burdened by bad loans, many companies in Europe are complaining about a credit crunch. With the European Investment Bank, we have an instrument which we should use to a greater extent and in a more targeted fashion. We want to ensure that small and medium-sized companies in particular have better access to loans and make better use of the EIB’s expertise.

4. Europe’s roads and railways, our energy and telecommunication networks are among the European economy’s best trump cards. Maintaining and enhancing them opens up new prospects for growth. More private capital has to be mobilized for the cross-border expansion of European infrastructure. Here, too, we have to explore innovative public-private partnerships.

5. Once before – back in the eighties and nineties – realizing the “four freedoms” released tremendous forces for growth in the European internal market. Today, the expansion of the internal market to cover new spheres offers great opportunities once more.

That applies to the digitized economy and online trade.

It also includes the energy sector, where greater competition will result in lower prices and greater security of supply for consumers.

And that will strengthen small and medium-sized companies by reducing red tape, ensuring better access to risk capital and modernizing European procurement law.

6. We want to strengthen free trade. Three quarters of global trade take place outside the EU and more than 80% of global growth is produced there, especially in Asia as well as North and South America.

As long as it’s not possible to conclude the Doha Round on a global free trade system, it’s up to the EU to conclude more free trade agreements with new and long-established centres of power on the world stage.

We want to swiftly conclude the negotiations with Canada and India. The negotiations with Singapore and Malaysia are on the right track. It was clear at the EU-ASEAN Ministerial Meeting just a few days ago that there is great interest throughout the region in an agreement with the EU. The preliminary talks for the commencement of negotiations between the EU and Japan are about to be concluded.

We are encouraging partners such as the Gulf states and Brazil to provide the negotiations with fresh impetus.

There have been preliminary talks with the US and considerable preliminary work has already been done. We’re ready to conclude a comprehensive agreement with our closest ally, the United States of America.

This Government’s policy on how to tackle the crisis is clear: Europe isn’t the problem but, rather, part of the solution to the problem. It’s not enough to only take action in the spheres of financial and economic policy in response to the crisis, no matter how important these areas are. However, we need to find structural responses. The EU must become more effective and efficient.

We’ve established a Future of Europe Group in which we discuss institutional improvements which can also be implemented below the level of treaty amendments.

The key historical question is this: are the centrifugal forces being exerted in Europe during this crisis stronger than the political power of cohesion? There’s a trend towards repatriation which concerns me.

The freedom to travel is one of the most precious European achievements. Preserving and defending it is of key importance to the Federal Government. Anyone who starts to give up Europe in some areas will ultimately lose it all.

Germany is relatively large within Europe. In the world, however, it’s quite a small fish. We therefore need our European partners.

What’s required of us Europeans is that we show every confidence in ourselves: in economic, political and cultural terms.

Europe is a community founded on shared values. That’s why we don’t remain silent when our shared values are violated right next door. We stand shoulder to shoulder with the oppressed in Belarus.

Democracy and the rule of law are pillars of our European value system.

Without them, no country can form closer links with the EU. That also applies to Ukraine.

We are seeking to ensure that Yulia Tymoshenko receives adequate treatment, both medically and in terms of the rule of law. However, we’re also concerned about the fate of other opposition prisoners in Ukraine.

There’s a European way of life of which we can be proud. That involves maintaining a balance between freedom and security, as well as ensuring that the individual, and not just the collective, counts for something.

It also means that we appreciate not only material but also post material values, namely individual freedom, social security, freedom from fear, cultural diversity and an environment worth living in.

In the age of globalization, we have to join forces to defend this way of life. We want Europe to assert itself.

The friendship which Germany and France share is crucial to Europe’s success. We congratulate the newly elected French President, François Hollande. We will work closely together with the new French Government in a spirit of trust and tackle the problems facing us in collaboration with our European partners. We thank the outgoing French President, Nicolas Sarkozy, for the amicable cooperation of the last few years. And allow me to also thank Foreign Minister Alain Juppé and the other cabinet members.

Our efforts are both pragmatic and far-sighted; we are fighting for Europe with our hearts and with our minds.

Our task is set forth in the Preamble of the Basic Law: we are called upon “to promote world peace in a united Europe”. Europe is the answer to the darkest chapter in our history. Europe is the answer of peace to centuries of war. More than this, however, Europe is our future. Europe is our fate and our passion.